National Labor Relations Board Reinstates Joint Employer Standard
Bayan Biazar, Associate
On February 26, 2026, the National Labor Relations Board (“NLRB”) issued a rule[1] withdrawing the 2023 joint employer rule, which had expanded potential employer liability by allowing a finding of joint-employer status based on reserved or indirect control over an employee’s terms and conditions of employment, even if such control was not exercised. The joint employer standard—used to determine whether two entities are considered employers of the same employees—was thereby narrowed, as the NLRB reinstated the more control-based 2020 standard. This latest development reflects another shift in federal labor policy and underscores the ongoing fluctuation in how joint employment is defined under the National Labor Relations Act (“NLRA”).
The 2023 Joint Employer Rule
Prior to the reinstatement of the 2020 rule (the “2020 rule”), the NLRB issued a 2023 joint employer rule (the “2023 rule”)[2] that significantly expanded the standard for determining when joint employment exists, meaning where one legally separate entity is considered an employer of another legally separate entity’s employee. Under the 2023 rule, joint-employer status could be found where an entity possessed the authority to control, or exercised indirect control over, the terms and conditions of an employee’s employment, regardless of whether that control was actually exercised.
As a result, an employer’s reserved contractual authority or indirect control, including control exercised through an intermediary, could be sufficient to establish joint employer status among multiple employers. The enaction of the 2023 rule marked a significant departure from prior precedent by broadening the scope of potential liability for employers.[3]
Reinstatement of the 2020 Standard
The NLRB’s reinstatement of the 2020 rule formally withdrew the 2023 rule.[4] Under the reinstated 2020 rule, an employer will only be considered a joint employer if it exercises “substantial direct and immediate control”[5] over one or more essential terms and conditions of an employee at a legally separate entity’s employment. These essential terms and conditions of employment include hiring, firing, discipline, supervision, hours, benefits, direction, and wages.
Unlike the 2023 rule, an employer’s indirect control or unexercised contractual authority over an employee at a legally separate entity, alone, is not sufficient to establish joint employer status. Instead, the analysis focuses on whether an employer actually exercises meaningful control over the employees at a legally separate entity.
Continuing Policy Shifts
The return to the 2020 rule continues a broader trend of shifting labor policy depending on the administration in power. Over the past decade, the joint employer standard has repeatedly expanded and contracted, creating uncertainty for employers attempting to structure business relationships. While the 2020 rule reflects a return to a more predictable, control-based analysis, it is unlikely to be the final iteration.
Employer Considerations
For employers, this change provides some clarity in the short term. Businesses that utilize third-party labor arrangements may face reduced risk of joint employer liability so long as they do not exercise substantial direct and immediate control over essential employment terms and conditions.
Employers should also recognize that this area of law remains unsettled. Given the history of frequent changes, future rulemaking or litigation could once again alter the standard. As such, businesses should continue to carefully evaluate their contractual relationships and operational practices to ensure compliance under both current and potential future frameworks. Campbell Litigation is available to consult employers on whether they qualify as joint employers under the 2020 rule.
[1] See https://public-inspection.federalregister.gov/2026-03955.pdf for the reinstatement of the 2020 rule.
[2] See https://www.govinfo.gov/content/pkg/FR-2023-10-27/pdf/2023-23573.pdf for the fully published 2023 rule.
[3] On March 8, 2024, the U.S. District Court for the Eastern District of Texas in the case Chamber of Commerce v. NLRB, 723 F.Supp.3d 498, 519 vacated the 2023 rule.
[4] According to the NLRB, the decision to vacate the 2023 rule in the Chamber of Commerce case meant that the 2023 rule had never taken effect.
[5] Substantial direct and immediate control means direct and immediate control that has a regular or continuous consequential effect on an essential term or condition of employment of another employer's employees. Such control is not “substantial” if only exercised on a sporadic, isolated, or de minimis basis. See 29 C.F.R. § 103.40(d).